Published: 14/07/2023 By ECAPSterling rallied further yesterday as it continues to draw support from rising bets that the BoE may need to raise interest rates further to combat high inflation. The speculations were fuelled by stronger UK wage growth data, which, according to BoE Governor Andrew Bailey, is harming the efforts to contain inflation.
The Euro held its ground yesterday after the minutes of the ECB meeting held in June revealed that policymakers remain determined to continue the current hiking cycle beyond July to bring inflation back to target. This hawkish outlook offsets emerging signs of a cooling economy and continues to underpin the shared currency.
The US dollar edged higher in early European hours this morning, rebounding from 15-month lows as traders factored in an end of the Federal Reserve’s rate hike cycle as inflation eases. However, despite these gains, the dollar is around 2.5% lower this week, its worst weekly performance in eight months.